Updated January 2018
The restriction on VA loan amounts can seem complicated, because, in reality, there is no maximum loan amount according to the VA. What is limited is the amount of the loan that the VA will guarantee, which typically affects the decision of the lender regarding how much money they are willing to lend you. Overall, the loan limits set by the VA are the maximum amount you can borrow under the “no down payment” guidelines. Outside of those guidelines and with a down payment, your maximum loan amount might be higher.
Allowed VA Loan Amounts
In general, a veteran with full entitlement will receive a $36,000 guarantee. Most lenders allow you to borrow up to 4 times that amount without putting down a down payment. This means that most borrowers can secure financing for $144,000 with no down payment. This is called the basic entitlement, which every qualified veteran receives.
The Bonus Loan Amount
What many veterans do not realize is that there is more to their entitlement than the basic $36,000. There is what is called a bonus entitlement, which in most counties is equal to $68,250. Because most lenders will allow up to four times this amount as well, the bonus loan amount can go up to $273,000.
2018 VA Loan Limits
The 2018 loan limit rose to $453,100 for the previous $424,100. However, for the 220 areas identified as high cost, the loan limits are higher.
Counties whose maximum loan amount allowance that exceeds $453,100 are considered high-cost areas. This is because it requires more money in order to purchase a home located in these areas. As a general rule, the VA will guarantee 25% of the maximum for the county in which you reside.
These new loan limits will apply to all loans closed from January 1, 2018 to December 31, 2018.
Qualifying for the VA Loan
It is important to remember that just because you are “entitled” to a home that is453,100 in most US counties, that does not mean you are qualified to receive a loan of that amount. You will have to provide the lender with supporting documents to show that you qualify for the loan including:
- Credit report
- Income documentation
- Asset documentation (if you need a compensating factor)
- Employment verification
The guidelines to meet the VA requirements are not difficult to meet and are not very restrictive either. Most lenders have quite a bit of leeway when it comes to qualifying veterans as there is not a specific credit score or debt ratio they must abide by; instead, they are supposed to focus on the disposable income you have each month and the affordability of the home loan.
As long as you can prove that you can afford the loan and you stay within the maximum VA loan amounts, you will not need to put any money down on your VA loan, which could mean quite a significant home purchase for very little money up front. If you are unsure about what you qualify for, talk to a few VA lenders to see what they can offer you.